Operating cash flow rises (€ +296 million in 9M 2012) as a result of improved net working capital

Net debt reduced by € 0.1 billion year on year

Despite a difficult consumer environment, especially in the Eurozone, METRO GROUP continued its positive sales trend of the first six months also in the 3rd quarter 2012: adjusted for the disposal of Makro UK, sales generated during the period from July to September climbed by 2.0% year on year to reach € 15.9 billion. "Thanks to our numerous measures to increase the customer value our business has for the most part remained stable. However, these mesures cannot develop their full effects in the present economic environment and this reflects in our quarterly results", said Olaf Koch, Chairman of the Management Board of METRO AG. Q3 EBIT before special items reached € 398 million (Q3 2011: € 614 million). METRO GROUP's earnings in particular reflect the impact of the general economic situation in Southern Europe and parts of Eastern Europe. Arithmetically, roughly half of the decline in earnings is attributable to significantly lower income from real estate divestments. "In view of the challenging economic situation we will continue to consistently drive the realignment of our business models. We are convinced that we are on the right track with the strategic measures taken so far", said

Also in the third quarter, new sales channels and formats, an assortment adapted even better to customer demands, extended customer advice and services as well as the price positioning ranked among the main focuses of the sales lines. METRO Cash & Carry, for example, further improved delivery sales: from January to September 2012, sales climbed by nearly 40% to over € 1.6 billion (9M 2011: € 1.2 billion). Group own brand sales grew by 10 per cent to € 5.5 billion (9M 2011: € 5.0 billion). Online sales at Media-Saturn almost tripled to reach € 480 million (9M 2011: € 169 million). Starting from the third quarter, customers of Media Markt and Saturn have the option to shop not only online or at the stores, but also via their smart phones. At the Real online shop, sales generated during the period from January to September 2012 were up by more than one third from last year to come in at € 21 million. Moreover, Real combined its formerly separate websites for stationary and online business under www.real.de in the third quarter 2012. Galeria Kaufhof was able to further extend its market share in textiles as a result of phasing out consumer electronics in nearly all department stores to the benefit of higher-margin product categories such as accessories, fashion and

Besides mesures to enhance sales and efficiency, METRO GROUP plans to further intensify its activities to improve the cash flow and net working capital. Also the reduction of its net debt remains a clear target for the company.

Sales and earnings development

During the period from January to September 2012, sales of METRO GROUP climbed by 1.5% to € 47.4 billion (9M 2011: € 46.7 billion). In Q3 2012, sales rose by 0.6% to € 15.9 billion (Q3 2011: € 15.8 billion). Adjusted for the disposal of Makro UK sales increased by 2.0%. The business of Makro UK had been divested at the beginning of the third quarter 2012 so that the corresponding sales and earnings figures are no longer included in the business development reported by METRO GROUP.

In Germany, sales generated during the period from January to September 2012 grew by 0.5% to € 17.8 billion. In Q3, sales dropped by 2.0% to € 5.9 billion, also on account of one less trading day in September as well as declining nonfood sales. Galeria Kaufhof, by contrast, reported a very positive development of like-for-like sales.

International sales generated during the period from January to September 2012 climbed by 2.2% to € 29.5 billion (in local curency: +2.0%). The international share of sales rose from 61.9% to 62.3%. In the third quarter, sales grew by 2.2% to € 10.0 billion (in local currency +0.7%).

In Western Europe, sales generated during the period from January to September 2012 dropped by 2.9% to € 14.3 billion (in local currency: -3.1%) and were significantly impaired by the divestment of Saturn France one year earlier as well as the disposal of Makro UK at the beginning of the third quarter 2012. Net of these divestments, sales came in just a little above the prior-year period. In the third quarter, the economic problems in several important markets increasingly affected the development of sales. Q3 sales declined by 5.4% to € 4.7 billion (in local currency: -5.6%).

Sales in Eastern Europe generated during the period from January to September 2012 grew by 3.8% to € 12.6 billion. In local currency, sales rose by 5.2%. The strong growth momentum persisted in Q3. Sales climbed by 6.2% to € 4.4 billion (in local currency: +4.8%).

In the region Asia/Africa, the highly dynamic growth continued. Sales generated during the period from January to September 2012 increased significantly by 28.7% to € 2.7 billion. In local currency, sales went up by 17.7%. In Q3, sales continued to grow further and climbed by 32.2% to € 0.9 billion (in local currency: +19.1%).

METRO GROUP

9M 2011
(in € billion)

9M 2012
(in € billion)

Change

Change in local currency

Sales

46.7

47.4

1.5%

1.4%

Germany

17.8

17.8

0.5%

0.5%

Western Europe (excl. Germany)

14.7

14.3

-2.9%

-3.1%

Eastern Europe

12.1

12.6

3.8%

5.2%

Asia/Africa

2.1

2.7

28.7%

17.7%

METRO GROUP

Q3 2011
(in € billion)

Q3 2012
(in € billion)

Change

Change in local currency

Sales

15.8

15.9

0.6%

-0.3%

Germany

6.0

5.9

-2.0%

-2.0%

Western Europe (excl. Germany)

5.0

4.7

-5.4%

-5.6%

Eastern Europe

4.2

4.4

6.2%

4.8%

Asia/Africa

0.7

0.9

32.2%

19.1%

Operating earnings EBIT adjusted for special items receded during the first nine months from € 1,066 million to € 704 million; including special items in the amount of € 297 million (9M 2011: € 93 million) EBIT dropped to € 407 million (9M 2011: € 972 million). These special items mainly include impairment losses in the amount of € 166 million resulting from the dispoal of Makro UK as well as expenses in the amount of € 131 million, especially for the restructuring measures. In addition to the like-for-like drop in sales in Southern Europe and parts of Eastern Europe, investments into new competencies, distribution channels and price positioning made in the framework of the strategic realignment impaired earnings. In Q3 2012, EBIT before special items dropped from € 614 million to € 398 million. This drop was mainly attributable to the segment Real Estate. The prior-year quarterly earnings included the successful placement of a real estate package in Italy resulting in a contribution to earnings in the amount of over € 100 million.

Earnings before taxes (EBT) generated during the first nine months of 2012 before special items came in at € 275 million (9M 2011: € 557 million). Before special items, the net profit for the period attributable to the shareholders of METRO AG dropped to € 154 million (9M 2011: € 294 million). In the third quarter, the net profit for the period attributable to the shareholders of METRO AG came in at € 125 million (Q3 2011: € 227 million). Adjusted for special items, the earnings per share generated during the first nine months of 2012 stood at € 0.47 following € 0.90 during the year-earlier period. In the third quarter, the earnings per share before special items dropped to € 0.38 (Q3 2011: € 0.70).

The operating cashflow of METRO GROUP has improved further: during the period from January to September 2012, cash outflow from operating activities came in at € 2.1 billion following € 2.4 billion during the year-earlier period. The cashflow improved despite the EBIT drop owing to a strict inventory management and an improved supplier management. The change in net working capital improved appreciably by € 398 million year on year. Thanks to the enhanced operating cash flow, the net debt dropped by € 0.1 billion as compared to 30 September 2011.

Earnings of METRO GROUP (in € million)

9M 2011

9M 2012

EBIT before special items

1,066

704

Earnings before taxes (EBT) before special items

557

275

Net profit for the period attributable to the shareholders of METRO AG before special items

294

154

Earnings per share before special items in €

0.90

0.47

EBIT

972

407

Earnings before taxes (EBT)

463

-44

Net profit for the period

266

-21

Net profit for the period attributable to the shareholders of METRO AG

227

-26

Earnings per share

0.69

-0.08

Earnings of METRO GROUP (in € million)

Q3 2011

Q3 2012

EBIT before special items

614

398

Earnings before taxes (EBT) before special items

428

236

Net profit for the period attributable to the shareholders of METRO AG before special items

227

125

Earnings per share before special items in €

0.70

0.38

EBIT

563

346

Earnings before taxes (EBT)

377

162

Net profit for the period

211

89

Net profit for the period attributable to the shareholders of METRO AG

190

77

Earnings per share

0.58

0.24

Outlook

METRO GROUP continues to expect a very uncertain general economic situation that will have a negative effect on consumer sentiment. This applies in particular for the crisis-ridden countries in Southern Europe where record unemployment and fiscal measures to reign in sovereign debt are materially affecting consumer spending, especially on non-food items.

The persistently difficult macroeconomic situation in numerous European countries slows down the positive sales trend for the full year 2012. This contrasts with a large number of measures in all sales lines aimed at growing sales and already showing first results. Year to date, these measures have contributed to compensating the crisis-related drop in consumer spending although earnings continue to be under pressure. Therefore, METRO GROUP expects a rise in sales for the full year and EBIT before special items to come in at around € 2 billion.

Development of the business segments

From January to September 2012, sales of METRO Cash & Carry grew by 2.1% to € 23.0 billion (in local currency: +1.6%). This was in particular owed to the dynamic development of sales in Eastern Europe and Asia. Like for like, sales improved by 0.5%. In Q3, the sales trend of the first half continued. However, the accelerated economic slowdown in Southern Europe and parts of Eastern Europe affected our customer’s businesses and thus the development of sales at METRO Cash & Carry. As a consequence, especially nonfood sales continued to recede in many countries.

In Germany, sales generated during the period from January to September 2012 dropped by 3.0% to € 3.6 billion. This decline is almost exclusively attributable to the optimisation of the store portfolio (Q4 2011: 10 store closures). In Q3, the sales trend lagged behind that of the first half. Besides one missing trading day in September the decline is mainly attributable to weaker nonfood sales. Despite further aggravated macroeconomic conditions and the disposal of Makro UK, sales in Western Europe generated during the period from January to September 2012 totaled € 8.2 billion. In a challenging general market environment, METRO Cash & Carry gained further market share. The sales trend deteriorated significantly at the end of the third quarter, especially in Southern Europe. Nonfood sales in particular were affected by this trend. In Eastern Europe, sales generated from January to September 2012 grew dynamically by 4.4% to € 8.7 billion despite the difficult macroeconomic situation. In local currency, sales even climbed by 5.4%. Also like for like, sales improved appreciably by 1.8%. In the process, METRO Cash & Carry further increased its market share in many countries. The positive sales development in Eastern Europe continued also in the third quarter. Russia again reported a double-digit growth of like for like sales. In Romania, the Q3 sales trend followed the positive trend of the second quarter and like for like sales grew further. Overall, 10 out of 14 countries reported a better sales trend in the third quarter than in the first half of 2012. Sales in Asia/Africa generated during the period from January to September 2012 climbed by 28.0% to € 2.6 billion (in local currency: +17.1%). All countries again reported high growth rates, also in local currency. At the end of the third quarter, China had already become the fourth largest cash & carry country worldwide. The international share of sales during the first nine months 2012 rose from 83.7% to 84.5%.

Mainly as a consequence of the divestment of Makro UK and of restructuring expenses, the EBIT generated during the period from January to September 2012 receded to € 256 million (9M 2011: € 527 million). In total, special items in the amount of € 200 million were incurred (9M 2011: € 42 million) and, besides the disposal of Makro UK (€ 123 million), also include restructuring expenses in many countries, especially for METRO Cash & Carry Germany. During the period from January to September, EBIT before special items came in at € 456 million (9M 2011: € 569 million). This drop in earnings reflects the setting up of functions to enhance the customer proposition which could only in part be compensated by efficiency improvements in other areas. Moreover, earnings were impaired by higher expansion costs and investments into prices. In the third quarter, the earnings development was in addition also affected by a weaker development of like for like sales, especially in Southern Europe: EBIT before special items dropped from € 276 million to € 237 million.

Metro Cash & Carry

9M 2011
(in € billion)

9M 2012
(in € billion)

Change

Change in local currency

Sales

22.5

23.0

2.1%

1.6%

Germany

3.7

3.6

-3.0%

-3.0%

Western Europe (excl. Germany)

8.6

8.2

-3.9%

-3.9%

Eastern Europe

8.3

8.7

4.4%

5.4%

Asia/Africa

2.0

2.6

28.0%

17.1%

EBIT (before special items)

569 million

456 million

-113 million

Metro Cash & Carry

Q3 2011
(in € billion)

Q3 2012
(in € billion)

Change

Change in local currency

Sales

7.7

7.8

0.8%

-0.6%

Germany

1.2

1.2

-5.1%

-5.1%

Western Europe (excl. Germany)

3.0

2.7

-9.3%

-9.3%

Eastern Europe

2.9

3.1

6.6%

5.3%

Asia/Africa

0.7

0.9

32.2%

19.2%

EBIT (before special items)

276 million

237 million

-39 million

Real with like for like sales growth in Germany

Sales of Real generated during the period from January to September 2012 dropped slightly by 0.4% to € 7.9 billion. In local currency, sales rose by 0.3%. Owing to a weaker development of the nonfood business, Q3 sales receded by 1.5% to € 2.6 billion (in local currency: -1.7%). Besides a customer loyalty campaign organised in summer that fell short of expectations, the shift of the campaign focus into the 4th quarter resulted in a drop in sales, especially nonfood sales. In addition, also one missing trading day burdened the sales trend. The Real online shop continued to grow very dynamically. From January to September 2012, sales grew by more than one third compared to the prior-year period.

In Germany, sales generated during the period from January to September 2012 remained at the year-earlier level and reached € 5.8 billion. Like for like, however, sales rose by 0.7%. With these figures, Real managed to stand its ground in the hypermarket business despite store disposals. Sales in Eastern Europe generated during the period from January to September 2012 dropped by 1.4% to € 2.1 billion on the grounds of exchange rate fluctuations. In local currency, however, sales grew by 1.3%. In the third quarter, sales rose by 1.3% to € 0.7 billion (in local currency: +0.7%). Higher food sales more than compensated the persistently weak demand for nonfood products. All countries except Poland reported like-for-like growth. In Romania, the positive turnaround continued: for the first time since more than two years a like-for-like sales growth was achieved again. Russia continued to generate above-average growth rates.

EBIT before special items during the first nine months 2012 stood at € -4 million (9M 2011: € 13 million). In Q3, EBIT before special items receded from € 24 million to € 2 million. Better earnings from international operations could not compensate for the sales- and goods-related drop in earnings in Germany resulting from the shift of the campaign focus into the fourth quarter.

Real

9M 2011
(in € billion)

9M 2012
(in € billion)

Change

Change in local currency

Sales

7.9

7.9

-0.4%

0.3%

Germany

5.8

5.8

0.0%

0.0%

Eastern Europe

2.1

2.1

-1.4%

1.3%

EBIT (before special items)

13 million

-4 million

-17 million

Real

Q3 2011
(in € billion)

Q3 2012
(in € billion)

Change

Change in local currency

Sales

2.6

2.6

-1.5%

-1.7%

Germany

1.9

1.9

-2.6%

-2.6%

Eastern Europe

0.7

0.7

-1.3%

0.7%

EBIT (before special items)

24 million

2 million

-22 million

Media-Saturn continues to grow dynamically in Eastern Europe

Sales of Media-Saturn generated during the period from January to September 2012 in an increasingly more challenging market climbed by 2.0% to € 14.3 billion (in local currency: +2.0%). The online business grew dynamically thanks to the acquisition of Redcoon in the prior year and the successful launch of the multichannel offerings. Online sales climbed to € 480 million (9M 2011: € 169 million). In the third quarter, sales grew by 1.4% to € 4.8 billion.

In Germany, sales generated during the period from January to September 2012 increased by 3.4% to € 6.5 billion. Like for like, sales came in at the prior-year level. In Q3, the sales trend was slightly downward, also on account of one missing trading day. The multichannel offer continued to be received very positively by the customers. The product range was enlarged and at the end of September comprised approximately 6,000 products at Mediamarkt.de and over 6,500 at Saturn.de. During the period from January to September, online sales came in at € 235 million meaning that 3.6% of total sales were generated online.

In Western Europe, sales generated during the period from January to September 2012 receded by 1.5% (in local currency: -1.9%). Adjusted for the divestment of Saturn France, however, sales climbed by 2.3%. The challenging macroeconomic environment significantly affected demand for consumer electronics, especially in Southern Europe. This environment notwithstanding, Media-Saturn was able to extend its market share. In Q3, sales of Media-Saturn climbed by 0.5%. Online sales in Western Europe continued to develop very dynamically reaching € 231 million. In the Netherlands and Italy, the growth of Media-Saturn’s online sales outperformed that of the general online market.

In Eastern Europe, sales generated during the period from January to September 2012 climbed significantly by 7.0% to € 1.8 billion (in local currency: +8.8%). Like for like, sales grew by 2.3%. In the third quarter, in particular Russia and Turkey reported a significant growth in sales. In Asia, sales continued to grow on the grounds of expansion.

EBIT before special items generated during the period from January to September 2012 dropped to € -6 million (9M 2011: € 163 million). In addition to the sales-related drop in earnings also the sharpening of the price profile and fewer advertising subsidies weighed on earnings. Add to this higher expansion costs, higher start-up losses as well as costs for the further extension of the multichannel business. Also in the third quarter earnings were impacted, especially by the downward trend in like for like sales and investments into prices. This notwithstanding, Q3 EBIT before special items was again distinctly positive coming in at € 73 million. Germany materially contributed to this positive result.

Media-Saturn

9M 2011
(in € billion)

9M 2012
(in € billion)

Change

Change in local currency

Sales

14.0

14.3

2.0%

2.0%

Germany

6.3

6.5

3.4%

3.4%

Western Europe (excl. Germany)

6.0

6.0

-1.5%

-1.9%

Eastern Europe

1.7

1.8

7.0%

8.8%

Asia (China)

61 million

100 million

39 million

EBIT (before special items)

163 million

-6 million

-101 million

(in € billion)

Media-Saturn

Q3 2011
(in € billion)

Q3 2012
(in € billion)

Change

Change in local currency

Sales

4.7

4.8

1.4%

0.9%

Germany

2.1

2.1

-0.6%

-0.6%

Western Europe (excl. Germany)

2.0

2.0

-0.5%

0.3%

Eastern Europe

0.6

0.7

9.6%

7.4%

Asia (China)

22 million

30 million

8 million

EBIT (before special items)

141 million

73 million

-68 million

Galeria Kaufhof with a distinct sales growth in Q3 2012

Sales of Galeria Kaufhof generated during the period from January to September 2012 came in slightly above the year-earlier period rising to € 2.1 billion. Like for like, sales came in at the prior-year level. In Q3, the sales trend improved significantly and rose by 1.8% to € 0.7 billion. Like for like, sales even climbed by 2.8%.

In Germany, Galeria Kaufhof extensively modernised another 11 department stores during the period from January to September 2012. Consumer electronics have in the meantime been phased out in nearly all locations to the benefit of higher-margin product categories from the areas of accessoires, fashion and shoes. During the first nine months, Galeria Kaufhof improved sales slightly to € 2.0 billion despite four store closures. In Q3, sales grew by 2.1% despite one missing trading day. Like for like, sales even grew by 3.3%.

In Western Europe, sales generated during the period from January to September 2012 climbed by 0.7%. Here, business benefited from a positive development of textiles sales. Like for like, sales increased by 0.6%. In Q3, sales receded because summer sales had already started at the end of the second quarter.

EBIT before special items improved during the period from January to September 2012 thanks to a better gross margin as a result of the sales floor optimisation and a strict cost management to € -24 million (9M 2011: € -40 million). Also in the third quarter, earnings of Galeria Kaufhof improved significantly. Thanks to higher gross profit and cost cutting, EBIT before special items amounted to € -2 million (Q3 2011: € -9 million).

Galeria Kaufhof

9M 2011
(in € billion)

9M 2012
(in € billion)

Change

Sales

2.1

2.1

0.1%

Germany

2.0

2.0

0.1%

Western Europe

0.1

0.1

0.7%

EBIT (before special items)

-40 million

-24 million

16 million

Galeria Kaufhof

Q3 2011
(in € billion)

Q3 2012
(in € billion)

Changes

Sales

0.7

0.7

1.8%

Germany

0.6

0.7

2.1%

Western Europe

45 million

44 million

-1 million

EBIT (before special items)

-9 million

-2 million

7 million

Real Estate

The Real Estate segment comprises all real estate assets of METRO GROUP as well as real estate-related services. As per 30 September 2012, METRO GROUP owned 653 locations (31 December 2011: 688).

Earnings of the Real Estate segment mainly constitute rental income from the sales lines of METRO GROUP. EBIT before special items dropped to € 411 million (9M 2011: € 520 million). This decline is mainly attributable to lower contributions from the active portfolio management during the third quarter. In Q3, EBIT before special items reached € 128 million (Q3 2011: € 245 million). The year-earlier quarter EBIT included the proceeds from the divestment of a real estate package in Italy. Moreover, since the third quarter, also the rental income from Makro UK is missing.

METRO GROUP is one of the largest and most international retailing companies. In 2011 the Group reached sales of around € 67 billion. The company has a headcount of over 280,000 employees and operates around 2,200 stores in 32 countries. The Group's performance is based on the strength of its sales brands which operate independently in their respective market segment: Metro/Makro Cash & Carry - the international leader in self-service wholesale, Real hypermarkets, Media Markt and Saturn - European market leader in consumer electronics retailing, and Galeria Kaufhof department stores.